News

Nordstrom invests in a drop shipping software platform

July 11, 2016 03:29 PM

Nordstrom Inc. has acquired a minority share in drop shipping software platform Dsco, which used to be known as DropShip Commerce.

Terms of the deal were not disclosed, and a Dsco spokeswoman declined to elaborate further. Nordstrom, No. 18 in the Internet Retailer 2016 Top 500 Guide, began using Dsco’s services about nine months ago to fulfill an unspecified number of its online orders. Dsco’s platform helps retailers manage their supply chains, inventory visibility and data. Drop shipping is when product suppliers or manufacturers ship orders directly to a retailer’s customers.

"We're impressed by Dsco's innovative approach to improve the online experience, and as the Dsco network grows we'll be able to further reduce complexity with our brand partners across our supply chain," Teri Bariquit, Nordstrom executive vice president says.

A Dsco spokeswoman says its other retailer clients include Modell’s Sporting Goods (No. 710 in the Internet Retailer 2016 Second 500 Guide) and Sharper Image.

In its Q1 2016 earnings report, Nordstrom reported that online sales account for 20.7% of the company’s sales. In March, Nordstrom chief financial officer Mike Koppel told analysts at the UBS Consumer Conference that online sales have been eating into Nordstrom’s profits. The shift to drop shipping could be a way of turning that around by having manufacturers that sell through Nordstrom’s websites ship their items directly from their own warehouses, rather than storing them in a Nordstrom warehouse.

"The partnership with Dsco will help us reduce complexity and make it easier for vendors to partner with us," a Nordstrom spokesman says. "In addition, customers should feel confident that what they order from us is available and will ship to them. Dsco helps us to improve the customer experience and also be more efficient with this piece of our e-commerce business."

Nordstrom’s Drop Ship Supplier Operations Manual posted on NordstromSupplier.com cites several reasons for why they encourage manufacturers to participate in its drop shipping program. Among them – It allows suppliers “to test new styles, extended colors and a fuller range of sizes before expanding items into our full line stores” and gives them better inventory coverage.